Daily Edition

Cable Show 2012: Netflix's Ted Sarandos on Cannibalizing TV Ratings

"We have billions of hours of viewing," the chief content officer tells the NCTA, "so we are going to take away from something.”

BOSTON -- Is Netflix like Mother Teresa who gives to all -- or more like Hannibal Lecter who cannibalizes the rest of the electronic media? That was a central question at a panel of industry moguls during the closing general session at the NCTA convention Wednesday.

Joining the top executives of Time Warner, News Corp. and Cox Communications to discuss that and other subjects was Netflix chief content officer Ted Sarandos, who said the truth is that his service is at different times some of each.

“I’m actually a little bit of both, depending on the content itself,” said Sarandos. “I don’t think there’s a black-and-white answer of what role we play. … We’re additive to certain programs. Whether we are cannibalistic or not to other programs, I don’t know. We have billions of hours of viewing, so we are going to take away from something.”

Moderator Piers Morgan brought up the recent report that said Nickelodeon ratings were down by about a quarter in Netflix homes. Sarandos did not deny it but said for others, like the drama Mad Men, showing old episodes has actually boosted interest in new episodes on AMC.

Is Netflix a friend or an enemy? Both, answered Patrick Esser, president of Cox Communications, a large cable system operator. “He’s a frenemy.”

Esser noted that while Netflix might take viewers away from some programming on cable, it also has been a big part of why people take their high-speed Internet services. He said that in March, 40 percent of their customers were using their online services to stream Netflix programming. He also noted many others were using it for HBO Go, the Time Warner-backed TV Anywhere initiative that allows cable subscribers to get shows on all of their electronic devices when they want, where they want.

Time Warner chairman Jeffrey Bewkes said the truth is that all of these options have helped increase the use of television, and unlike a year ago at the NCTA convention, the picture overall has gotten brighter. The fear of over-the-top services leading to cord cutting (people dropping cable) has not turned out to be justified, and as the recession fades, the business is doing better.

“TV Everywhere is being adopted faster than the DVR was, and faster than high definition," said Bewkes. "This is a huge success. People want things on demand. They want it to be easy. They want brands they trust. We have just got to do it all faster and faster. The [cable] industry should be proud of what you have done with these innovations faster than anything before.”

The success of TV Everywhere has come about because companies that compete fiercely in every other way have all embraced the idea.

“There needs to be a recognition we do compete day in and day out, but TV Everywhere was a challenge we all faced because it creates an experience that works for the consumer,” said Chase Carey, deputy chairman and president of News Corp. “We have to find ways to make all of these experiences easier to use, more accessible, and that requires us to work together. We all benefit by creating an experience the consumers can understand.”

Said Esser: “We all have a relationship with the user, whether it is the content itself, an app or Netflix. We all have a relationship with the customer. It’s more complex in that the customer has more choices than they had five years ago. As they have more choices, they have more leverage. That’s an ‘aha’ moment for our industry. So in much of this, we are not in competition. All boats rise when we're all successful.”